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The South Carolina Supreme Court determined that Act No. 338, which provided sales tax holidays for energy efficient products, handguns, and rifles, was unconstitutional. In addition to the sales tax holidays, there was also a provision that related to motor fuel terminals. The Act was deemed unconstitutional because it violated the one subject rule in the South Carolina constitution, which states that every act can only relate to one subject. (The American Petroleum Institute v. South Carolina Department of Revenue, South Carolina Supreme Court, May 4, 2009)


The South Carolina Department of Revenue has issued an advisory opinion to provide procedural guidance concerning the voluntary compliance program for taxpayers who may have nexus with the State, but are not registered nor collecting and remitting taxes. The advisory opinion discusses the details of the program, Department and taxpayer responsibilities, the look back period, and other general information regarding the program, which is effective on or after May 1, 2009 (Revenue Procedure #09-2, South Carolina Department of Revenue, March 9, 2009).


In response to a taxpayer’s inquiry, the South Carolina Attorney General’s office issued an opinion stating that items such as napkins, forks, spoons, and straws sold to restaurant owners by wholesalers are subject to taxation at the time of the sale. Sales of such items are considered to be supplies used or consumed by the restaurant owner in the operation of its business. Furthermore, these items do not qualify for exemption as items purchased for resale or items incident to the sale and delivery of the restaurant’s food. Also, the items are not taxed differently based on how the restaurant owner provides them to their customers. They are considered taxable retail sales regardless of whether the items are used in the restaurant or provided to customers taking food elsewhere. (Opinion of the Attorney General, South Carolina Attorney General’s Office, March 20, 2007)


The South Carolina Department of Revenue has issued a change in their state sales and use tax rate. As a result of legislation that was passed last year, the general rate will increase from 5% to 6%, effective June 1, 2007. However, the new rate does not impact lodging (subject to a 7% rate), items subject to the $300 maximum tax (motor vehicles, airplanes, boats, and certain trailers) which will remain subject to a 5% rate, or the 3% sales and use tax imposed on sales of unprepared food that may be purchased with food stamps distributed by the U.S. Department of Agriculture. Sales tax returns that reflect the new 6% state rate were included in the 2007 sales tax booklet and should be used for the June 2007 period and after. (Notice ST-464, South Carolina Department of Revenue, April 13, 2007)


South Carolina indicated that it does not believe an implant that used to degenerate spine disease is exempt from sales and use tax. In order for the exemption to take place, the device must replace a “missing part” of the body. A South Carolina Regulation 117-332 defines a prosthetic device as “an artificial device to replace a missing part of the body.” Thus, since the device merely prevented a malfunction of the body and is not defined as a prosthetic device, it did not qualify for the exemption. (Private Letter Ruling 05-3, South Carolina Department of Revenue, August 1, 2005)



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